Medical Properties Trust, Inc. Reports First Quarter Results
First Quarter Per Share Net Income of
Completes
“MPT’s
FIRST QUARTER AND RECENT HIGHLIGHTS
-
Per share net income of
$0.15 and Normalized Funds from Operations (“NFFO”) of$0.37 in the first quarter, both on a per diluted share basis; -
Previously announced completion of the acquisition of 30 acute care hospitals located throughout the
United Kingdom and now operated byCircle Health (“Circle”) for a purchase price of approximately$2.0 billion (£1.5 billion); -
Commenced rent on
Idaho Falls Community Hospital , an 88-bed acute care hospital development; -
Entered into agreements with
Ernest Health to provide$47.9 million in funding for the development of a 50-bed freestanding inpatient rehabilitation hospital inBakersfield, California that is expected to be fully operational in the third quarter of 2021; - Previously announced completion of a £700 million unsecured term loan in early January with proceeds used to partially fund the Circle/BMI transaction;
-
Sold 8.3 million common shares year-to-date through the Company’s “at-the-market” program at an average price of
$19.99 for net proceeds of approximately$164 million .
Included in the financial tables accompanying this press release is information about the Company’s assets and liabilities, net income and reconciliations of net income to NFFO, all on a basis comparable to 2019 results, and a reconciliation of pro forma total gross assets to total assets.
PORTFOLIO UPDATE
MPT completed the acquisition of the 30-hospital BMI transaction and commenced recognition of rental income in early January based on the pre-acquisition lease terms. Upon the U.K.’s Competition and Markets Authority’s recent approval of the post-acquisition lease terms, including a higher GAAP lease rate, MPT will begin recognizing rental income at the new rate; had this higher rate been effective for the entirety of the first quarter, NFFO would have been higher by approximately
In response to conditions created by the pandemic, MPT has offered to donate to a local municipality the real estate related to a general acute care hospital that was closed by the operator/lessee during 2019. The carrying amount of this real estate was approximately
The Company has pro forma total gross assets of approximately
OPERATING RESULTS AND OUTLOOK
Net income for the first quarter of 2020 was
NFFO for the first quarter of 2020 was
The Company reaffirms its estimated annualized NFFO run rate range including
These estimates do not include the effects, if any, of unexpected real estate operating costs, changes in accounting pronouncements, litigation costs, debt refinancing costs, acquisition costs, currency exchange rate movements, interest rate hedging activities, write-offs of straight-line rent or other non-recurring or unplanned transactions. Moreover, these estimates do not provide for the impact on MPT or its tenants and borrowers or on local and national governments worldwide of the ongoing global COVID-19 pandemic. These estimates may change if the Company acquires or sells assets in amounts that are different from estimates, market interest rates change, debt is refinanced, new shares are issued, additional debt is incurred, other operating expenses vary, income from our equity investments vary from expectations, or existing leases do not perform in accordance with their terms.
CONFERENCE CALL AND WEBCAST
The Company has scheduled a conference call and webcast for
A telephone and webcast replay of the call will be available beginning shortly after the call’s completion through
The Company’s supplemental information package for the current period will also be available on the Company’s website in the Investor Relations section.
About
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of forward-looking words such as “may,” “will,” “would,” “could,” “expect,” “intend,” “plan,” “estimate,” “target,” “anticipate,” “believe,” “objectives,” “outlook,” “guidance” or other similar words, and include statements regarding our strategies, objectives, future expansion and development activities, and expected financial performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results or future events to differ materially from those expressed in or underlying such forward-looking statements, including, but not limited to: (i) the economic, political and social impact of, and uncertainty relating to, the COVID-19 pandemic, including governmental assistance to hospitals and healthcare providers, including certain of our tenants; (ii) the ability of our tenants, operators and borrowers to satisfy their obligations under their respective contractual arrangements with us, especially as a result of the adverse economic impact of the COVID-19 pandemic, and government regulation of hospitals and healthcare providers in connection with same, such as mandatory deferrals of non-critical surgeries and intake of COVID-19 patients (as further detailed in our Current Report on Form 8-K filed with the
The risks described above are not exhaustive and additional factors could adversely affect our business and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended
Consolidated Balance Sheets | |||||||||||
(Amounts in thousands, except for per share data) |
|
|
|
||||||||
Assets |
(Unaudited) |
|
(A) |
||||||||
Real estate assets | |||||||||||
Land, buildings and improvements, intangible lease assets, and other |
$ |
9,933,444 |
|
$ |
8,102,754 |
|
|||||
Investment in financing leases |
|
2,068,166 |
|
|
2,060,302 |
|
|||||
Mortgage loans |
|
1,275,543 |
|
|
1,275,022 |
|
|||||
Gross investment in real estate assets |
|
13,277,153 |
|
|
11,438,078 |
|
|||||
Accumulated depreciation and amortization |
|
(627,467 |
) |
|
(570,042 |
) |
|||||
Net investment in real estate assets |
|
12,649,686 |
|
|
10,868,036 |
|
|||||
Cash and cash equivalents |
|
500,213 |
|
|
1,462,286 |
|
|||||
Interest and rent receivables |
|
38,768 |
|
|
31,357 |
|
|||||
Straight-line rent receivables |
|
355,424 |
|
|
334,231 |
|
|||||
Equity investments |
|
834,430 |
|
|
926,990 |
|
|||||
Other loans |
|
546,691 |
|
|
544,832 |
|
|||||
Other assets |
|
312,875 |
|
|
299,599 |
|
|||||
Total Assets |
$ |
15,238,087 |
|
$ |
14,467,331 |
|
|||||
Liabilities and Equity | |||||||||||
Liabilities | |||||||||||
Debt, net |
$ |
7,684,293 |
|
$ |
7,023,679 |
|
|||||
Accounts payable and accrued expenses |
|
428,136 |
|
|
291,489 |
|
|||||
Deferred revenue |
|
24,001 |
|
|
16,098 |
|
|||||
Obligations to tenants and other lease liabilities |
|
119,147 |
|
|
107,911 |
|
|||||
Total Liabilities |
|
8,255,577 |
|
|
7,439,177 |
|
|||||
Equity | |||||||||||
Preferred stock, |
|
- |
|
|
- |
|
|||||
Common stock, |
|
522 |
|
|
518 |
|
|||||
Additional paid-in capital |
|
7,079,913 |
|
|
7,008,199 |
|
|||||
Retained earnings |
|
14,025 |
|
|
83,012 |
|
|||||
Accumulated other comprehensive loss |
|
(111,280 |
) |
|
(62,905 |
) |
|||||
|
(777 |
) |
|
(777 |
) |
||||||
|
6,982,403 |
|
|
7,028,047 |
|
||||||
Non-controlling interests |
|
107 |
|
|
107 |
|
|||||
Total Equity |
|
6,982,510 |
|
|
7,028,154 |
|
|||||
Total Liabilities and Equity |
$ |
15,238,087 |
|
$ |
14,467,331 |
|
|||||
(A) Financials have been derived from the prior year audited financial statements. |
|
|||||||||||
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|
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|
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Consolidated Statements of Income |
|||||||||||
(Unaudited) |
|||||||||||
(Amounts in thousands, except for per share data) |
For the Three Months Ended |
||||||||||
|
|
|
|||||||||
Revenues | |||||||||||
Rent billed |
$ |
171,767 |
|
$ |
108,598 |
|
|||||
Straight-line rent |
|
31,421 |
|
|
20,651 |
|
|||||
Income from financing leases |
|
52,436 |
|
|
17,280 |
|
|||||
Interest and other income |
|
38,508 |
|
|
33,925 |
|
|||||
Total revenues |
|
294,132 |
|
|
180,454 |
|
|||||
Expenses | |||||||||||
Interest |
|
80,899 |
|
|
50,551 |
|
|||||
Real estate depreciation and amortization |
|
60,921 |
|
|
33,352 |
|
|||||
Property-related |
|
5,572 |
|
|
3,066 |
|
|||||
General and administrative |
|
33,385 |
|
|
23,451 |
|
|||||
Total expenses |
|
180,777 |
|
|
110,420 |
|
|||||
Other income (expense) | |||||||||||
Gain on sale of real estate |
|
1,325 |
|
|
- |
|
|||||
Real estate impairment charges |
|
(19,006 |
) |
|
- |
|
|||||
Earnings from equity interests |
|
4,079 |
|
|
3,720 |
|
|||||
Unutilized financing fees |
|
(611 |
) |
|
- |
|
|||||
Other (including mark-to-market adjustments on equity securities) |
|
(13,975 |
) |
|
204 |
|
|||||
Total other (expense) income |
|
(28,188 |
) |
|
3,924 |
|
|||||
Income before income tax |
|
85,167 |
|
|
73,958 |
|
|||||
Income tax (expense) benefit |
|
(4,010 |
) |
|
2,333 |
|
|||||
Net income |
|
81,157 |
|
|
76,291 |
|
|||||
Net income attributable to non-controlling interests |
|
(165 |
) |
|
(469 |
) |
|||||
Net income attributable to MPT common stockholders |
$ |
80,992 |
|
$ |
75,822 |
|
|||||
Earnings per common share - basic and diluted: | |||||||||||
Net income attributable to MPT common stockholders |
$ |
0.15 |
|
$ |
0.20 |
|
|||||
Weighted average shares outstanding - basic |
|
521,076 |
|
|
380,551 |
|
|||||
Weighted average shares outstanding - diluted |
|
522,179 |
|
|
381,675 |
|
|||||
Dividends declared per common share |
$ |
0.27 |
|
$ |
0.25 |
|
|
|||||||||||
Reconciliation of Net Income to Funds From Operations |
|||||||||||
(Unaudited) |
|||||||||||
|
|
|
|
|
|
|
|
||||
(Amounts in thousands, except for per share data) |
For the Three Months Ended |
||||||||||
|
|
|
|
|
|
|
|
||||
FFO information: | |||||||||||
Net income attributable to MPT common stockholders |
$ |
80,992 |
|
$ |
75,822 |
|
|||||
Participating securities' share in earnings |
|
(464 |
) |
|
(476 |
) |
|||||
Net income, less participating securities' share in earnings |
$ |
80,528 |
|
$ |
75,346 |
|
|||||
Depreciation and amortization |
|
70,502 |
|
|
39,854 |
|
|||||
Gain on sale of real estate |
|
(1,325 |
) |
|
- |
|
|||||
Real estate impairment charges |
|
19,006 |
|
|
- |
|
|||||
Funds from operations |
$ |
168,711 |
|
$ |
115,200 |
|
|||||
Write-off of straight-line rent and other, net of tax |
|
7,717 |
|
|
2,596 |
|
|||||
Non-cash fair value adjustments |
|
14,195 |
|
|
- |
|
|||||
Unutilized financing fees |
|
611 |
|
|
- |
|
|||||
Normalized funds from operations |
$ |
191,234 |
|
$ |
117,796 |
|
|||||
Share-based compensation |
|
10,036 |
|
|
6,715 |
|
|||||
Debt costs amortization |
|
3,409 |
|
|
2,067 |
|
|||||
Straight-line rent revenue and other |
|
(49,614 |
) |
|
(28,050 |
) |
|||||
Adjusted funds from operations |
$ |
155,065 |
|
$ |
98,528 |
|
|||||
Per diluted share data: | |||||||||||
Net income, less participating securities' share in earnings |
$ |
0.15 |
|
$ |
0.20 |
|
|||||
Depreciation and amortization |
|
0.13 |
|
|
0.10 |
|
|||||
Gain on sale of real estate |
|
- |
|
|
- |
|
|||||
Real estate impairment charges |
|
0.04 |
|
|
- |
|
|||||
Funds from operations |
$ |
0.32 |
|
$ |
0.30 |
|
|||||
Write-off of straight-line rent and other, net of tax |
|
0.02 |
|
|
0.01 |
|
|||||
Non-cash fair value adjustments |
|
0.03 |
|
|
- |
|
|||||
Unutilized financing fees |
|
- |
|
|
- |
|
|||||
Normalized funds from operations |
$ |
0.37 |
|
$ |
0.31 |
|
|||||
Share-based compensation |
|
0.02 |
|
|
0.02 |
|
|||||
Debt costs amortization |
|
- |
|
|
0.01 |
|
|||||
Straight-line rent revenue and other |
|
(0.09 |
) |
|
(0.08 |
) |
|||||
Adjusted funds from operations |
$ |
0.30 |
|
$ |
0.26 |
|
Notes:
(A) Certain line items above (such as real estate depreciation) include our share of such income/expense from unconsolidated joint ventures. These amounts are included with the activity of all of our equity interests in the "Earnings from equity interests" line on the consolidated statements of income.
(B) Investors and analysts following the real estate industry utilize funds from operations, or FFO, as a supplemental performance measure. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets, which assumes that the value of real estate diminishes predictably over time. We compute FFO in accordance with the definition provided by the
In addition to presenting FFO in accordance with the NAREIT definition, we also disclose normalized FFO, which adjusts FFO for items that relate to unanticipated or non-core events or activities or accounting changes that, if not noted, would make comparison to prior period results and market expectations less meaningful to investors and analysts. We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and the use of normalized FFO makes comparisons of our operating results with prior periods and other companies more meaningful. While FFO and normalized FFO are relevant and widely used supplemental measures of operating and financial performance of REITs, they should not be viewed as a substitute measure of our operating performance since the measures do not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which can be significant economic costs that could materially impact our results of operations. FFO and normalized FFO should not be considered an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our results of operations or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.
We calculate adjusted funds from operations, or AFFO, by subtracting from or adding to normalized FFO (i) non-cash revenue, (ii) non-cash share-based compensation expense, and (iii) amortization of deferred financing costs. AFFO is an operating measurement that we use to analyze our results of operations based on the receipt, rather than the accrual, of our rental revenue and on certain other adjustments. We believe that this is an important measurement because our leases generally have significant contractual escalations of base rents and therefore result in recognition of rental income that is not collected until future periods, and costs that are deferred or are non-cash charges. Our calculation of AFFO may not be comparable to AFFO or similarly titled measures reported by other REITs. AFFO should not be considered as an alternative to net income (calculated pursuant to GAAP) as an indicator of our results of operations or to cash flow from operating activities (calculated pursuant to GAAP) as an indicator of our liquidity.
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Annual Run-Rate Guidance Reconciliation |
||||||||
(Unaudited) |
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Annual Run-Rate Guidance - Per Share(1) |
||||
|
|
|
|
Low |
|
High |
||
Net income attributable to MPT common stockholders |
$ |
1.14 |
$ |
1.17 |
||||
Participating securities' share in earnings |
|
- |
|
- |
||||
Net income, less participating securities' share in earnings |
$ |
1.14 |
$ |
1.17 |
||||
Depreciation and amortization |
|
0.51 |
|
0.51 |
||||
Funds from operations |
$ |
1.65 |
$ |
1.68 |
||||
Other adjustments |
|
- |
|
- |
||||
Normalized funds from operations |
$ |
1.65 |
$ |
1.68 |
(1) The guidance is based on current expectations and actual results or future events may differ materially from those expressed in this table, which is a forward-looking statement within the meaning of the federal securities laws. Please refer to the forward-looking statement included in this press release and our filings with the
Pro Forma Total Gross Assets |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
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(Amounts in thousands) |
|
|
|
|
||||
Total Assets |
$ |
15,238,087 |
|
|||||
Add: | ||||||||
Unfunded amounts on development deals and commenced capital improvement projects(2) |
|
134,373 |
|
|||||
Accumulated depreciation and amortization |
|
627,467 |
|
|||||
Incremental gross assets of our joint ventures(3) |
|
633,926 |
|
|||||
Less: | ||||||||
Cash used for funding the transactions above |
|
(134,373 |
) |
|||||
Pro Forma Total Gross Assets(4) |
$ |
16,499,480 |
|
(2) Includes
(3) Adjustment to reflect our share of our joint ventures' gross assets.
(4) Pro forma total gross assets is total assets before accumulated depreciation/amortization and assumes all real estate binding commitments on new investments and unfunded amounts on development deals and commenced capital improvement projects are fully funded using cash on hand. We believe pro forma total gross assets is useful to investors as it provides a more current view of our portfolio and allows for a better understanding of our concentration levels as our binding commitments close and our other commitments are fully funded.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200429005948/en/
Director – Investor Relations
(205) 969-3755
tberryman@medicalpropertiestrust.com
Source: